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Thursday, November 26, 2009
Six Sigma Solution Video (Part I & II)
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Benefits Claimed by Six Sigma
(a) Making processes more rigorous by using hard, timely data, not opinions or gut feel, to make operating decisions.
(b) Cultivating customer loyalty by delivering superior value.
(c) Strengthening and rewarding teamwork by aligning employees around complex processes whose performance can still be easily, clearly and empirically measured.
(d) Accustoming managers to operating in a fast moving internal business environment that increasingly mirrors marketplace conditions outside the company.
(e) Achieving quantum leaps in product performance.
(f) Reducing variation in service processes, such as the time from order to delivery, or offering a consistent, high-quality service experience.
(g) Improving financial performance, through cost savings from projects, increased revenue from improved products and expanded operating margins.
(source: BPP Learning Media)
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(b) Cultivating customer loyalty by delivering superior value.
(c) Strengthening and rewarding teamwork by aligning employees around complex processes whose performance can still be easily, clearly and empirically measured.
(d) Accustoming managers to operating in a fast moving internal business environment that increasingly mirrors marketplace conditions outside the company.
(e) Achieving quantum leaps in product performance.
(f) Reducing variation in service processes, such as the time from order to delivery, or offering a consistent, high-quality service experience.
(g) Improving financial performance, through cost savings from projects, increased revenue from improved products and expanded operating margins.
(source: BPP Learning Media)
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Six Sigma DMAIC Strategy
Six Sigma Project Phases
Six Sigma process improvement projects follow a five phases pattern known by the acronym DMAIC.
• Define customer requirements
• Measure existing performance
• Analyse the existing process
• Improve the process
• Control the new process
Define Phase
• Is a planning phase – project definition, documentation of the existing process?
• The establishment of precise customer requirements from the process in question is an essential part of this phase.
• Customer requirement can be divided into 3 levels:
o Basic requirements are the minimum the customer will accept.
o Satisfiers improves the quality of the customer’s experience
o Delighters are totally unexpected by the customers
• Both external and internal customers may be vague in stating their requirements so careful research and logical definition are required.
• An important output from this phase is careful documentation of the process as it exists, probably using some form of flow diagram.
Measure Phase
• In this phase, statistical tools selected using black belt expertise, are used to assess current performance. Harmon suggests three measurement principles:
o Only measure what the customer thinks is important.
o Do not measure that the customer is satisfied with.
o Only measure things that can be improved.
• Three main areas for measurement:
o Inputs such as raw materials and product specifications
o Process elements such as cost, time, skills and training
o Outputs and customer satisfaction
• Outputs and customer satisfaction derive from and are determined by inputs and processes. This relationship is represented as an equation Y=f(X), Y is the output and X represent input and processes. Y is used to meant goal or objective.
Analyse Phase
• Each element of the process may be assessed into one of three categories:
o Value adding
o Necessary support to value adding activities
o Non-value adding.
• Establishing the status of the various aspects of the process will require the use of a range of techniques including statistical analysis, Pareto analysis and the Fishbone Analysis.
• Analysis should produce a list of problem causes and potential areas of improvement.
Improve Phase
• It is appropriate to revisit the project charter at the beginning of this phase, so as to incorporate any implications of the information obtained.
• Improving the process demands creative thought, can be guided by the wider experience of the team and its expert consultants.
• The problems identified in the analysis phase will indicate fruitful areas for consideration.
• People closely involved with the operation of a process usually develop ideas for improvement. There is often value in these ideas because of the great intimacy their authors have with the details of the process and its organizational setting.
• It is, however, important that all proposals for improvement are subjected to a rational review so that their implications may be considered in as much detail as possible. Cost and resource consequences are of particular importance.
• Implementation will require careful planning, probably small scale piloting and selling to stakeholders who were not involved in the project.
Control Phase
• Control process is a routine and continuing part of the management role.
• When a process has been improved, it is necessary to maintain some of the measurement process used during the improvement effort in order to exercise control.
• The cost of monitoring must be considered, so that the extent of measurement will be minimized.
• Some processes can be monitored automatically, with control systems that generate exception reports automatically.
(source: BPP Learning Media)
*****************************************
*********************
Six Sigma process improvement projects follow a five phases pattern known by the acronym DMAIC.
• Define customer requirements
• Measure existing performance
• Analyse the existing process
• Improve the process
• Control the new process
Define Phase
• Is a planning phase – project definition, documentation of the existing process?
• The establishment of precise customer requirements from the process in question is an essential part of this phase.
• Customer requirement can be divided into 3 levels:
o Basic requirements are the minimum the customer will accept.
o Satisfiers improves the quality of the customer’s experience
o Delighters are totally unexpected by the customers
• Both external and internal customers may be vague in stating their requirements so careful research and logical definition are required.
• An important output from this phase is careful documentation of the process as it exists, probably using some form of flow diagram.
Measure Phase
• In this phase, statistical tools selected using black belt expertise, are used to assess current performance. Harmon suggests three measurement principles:
o Only measure what the customer thinks is important.
o Do not measure that the customer is satisfied with.
o Only measure things that can be improved.
• Three main areas for measurement:
o Inputs such as raw materials and product specifications
o Process elements such as cost, time, skills and training
o Outputs and customer satisfaction
• Outputs and customer satisfaction derive from and are determined by inputs and processes. This relationship is represented as an equation Y=f(X), Y is the output and X represent input and processes. Y is used to meant goal or objective.
Analyse Phase
• Each element of the process may be assessed into one of three categories:
o Value adding
o Necessary support to value adding activities
o Non-value adding.
• Establishing the status of the various aspects of the process will require the use of a range of techniques including statistical analysis, Pareto analysis and the Fishbone Analysis.
• Analysis should produce a list of problem causes and potential areas of improvement.
Improve Phase
• It is appropriate to revisit the project charter at the beginning of this phase, so as to incorporate any implications of the information obtained.
• Improving the process demands creative thought, can be guided by the wider experience of the team and its expert consultants.
• The problems identified in the analysis phase will indicate fruitful areas for consideration.
• People closely involved with the operation of a process usually develop ideas for improvement. There is often value in these ideas because of the great intimacy their authors have with the details of the process and its organizational setting.
• It is, however, important that all proposals for improvement are subjected to a rational review so that their implications may be considered in as much detail as possible. Cost and resource consequences are of particular importance.
• Implementation will require careful planning, probably small scale piloting and selling to stakeholders who were not involved in the project.
Control Phase
• Control process is a routine and continuing part of the management role.
• When a process has been improved, it is necessary to maintain some of the measurement process used during the improvement effort in order to exercise control.
• The cost of monitoring must be considered, so that the extent of measurement will be minimized.
• Some processes can be monitored automatically, with control systems that generate exception reports automatically.
(source: BPP Learning Media)
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The Essence of Six Sigma
The Six Sigma Concept
• Six Sigma is a quality management methodology developed at Motorola in the late 1980s.
• Harmon and Pande and Hopp describe six sigma as the latest development in an evolutionary process that began with Scientific Management and continued through lean manufacturing and TQM.
• The essence of Six Sigma is to improve a process to the extent that there is only the tinniest probability that it will produce Unsatisfactory outputs.
• Probability – because there is no certainties in this sort of work.
• Pande and Hopp identify six themes in Six Sigma:
o Genuine focus on the customer
o Data and Fact driven management
o Processes as the key to success
o Proactive management
o Boundaryless collaboration
o Performance combined with tolerance of failure
(source: BPP Learning Media)
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• Six Sigma is a quality management methodology developed at Motorola in the late 1980s.
• Harmon and Pande and Hopp describe six sigma as the latest development in an evolutionary process that began with Scientific Management and continued through lean manufacturing and TQM.
• The essence of Six Sigma is to improve a process to the extent that there is only the tinniest probability that it will produce Unsatisfactory outputs.
• Probability – because there is no certainties in this sort of work.
• Pande and Hopp identify six themes in Six Sigma:
o Genuine focus on the customer
o Data and Fact driven management
o Processes as the key to success
o Proactive management
o Boundaryless collaboration
o Performance combined with tolerance of failure
(source: BPP Learning Media)
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Tuesday, November 24, 2009
Benchmarking
Benchmarking is the process of gathering data about targets and comparators, that permit current levels of performance to be identified and evaluated against best practice. Adoption of identified best practices should improve performance.
JS&W propose the following categories of benchmarking:
(a) Historical benchmarking
• An internal comparison of current against past performance.
• This is unsatisfactory, since it can induce complacence
• Comparison with competitors is the real test of performance.
(b) Industry/sector benchmarking
• Compares like with like across the industry or similar providers in the public service.
• Limitation of this method is that the whole industry may be under-performing and in danger from substitute products provided by other industries.
(c) Best-in-class benchmarking
• Looks for best practice wherever it can be found.
• This involves making comparison with similar features or processes in other industries.
• JS&W suggest that this approach can have a shock effect on complacent managers and lead to dramatic performance improvements.
The Benchmarking Process
Stage 1 - Ensure senior management commitment to the benchmarking process.
Stage 2 - The areas to be benchmarked should be determined and objectives should be set.
Stage 3 - Key performance measures must be established.
Stage 4 - Select organizations to benchmark against.
Stage 5 - Measure own and others’ performance.
Stage 6 – Compare performance.
Stage 7 – Design and implement improvement programmes
Stage 8 – Monitor improvements
Advantages of Benchmarking
(a) Position audit – benchmarking can assess a firm’s existing position, and provide a basis for establishing standards of performance.
(b) The comparisons are carried out by the managers who have to live with any changes implemented as a result of the exercise.
(c) Benchmarking focuses on improvement in key areas and set targets which are challenging but evidently achievable.
(d) The sharing of information can be a spur to innovation.
(e) The result should be improved performance, particularly in cost control and delivering value.
Drawbacks of Benchmarking
(a) It can cloud perception of strategic purpose by attracting too much attention to the detail of what is measured, since it concentrates on doing things right rather than doing the right thing: the difference between efficiency and effectiveness.
(b) Benchmarking does not identify the reasons why performance at a particular level, whether good or bad.
(c) It is a catching-up exercise rather than the development of anything distinctive. After the benchmarking exercise, the competitor might improve performance in a different way.
(d) It depends on accurate information about comparator companies.
(e) It is not cost-free and can divert management attention.
(f) It can become a hindrance and even a threat, sharing information with other companies can be a burden and a security risk.
(source: BPP Learning Media)
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JS&W propose the following categories of benchmarking:
(a) Historical benchmarking
• An internal comparison of current against past performance.
• This is unsatisfactory, since it can induce complacence
• Comparison with competitors is the real test of performance.
(b) Industry/sector benchmarking
• Compares like with like across the industry or similar providers in the public service.
• Limitation of this method is that the whole industry may be under-performing and in danger from substitute products provided by other industries.
(c) Best-in-class benchmarking
• Looks for best practice wherever it can be found.
• This involves making comparison with similar features or processes in other industries.
• JS&W suggest that this approach can have a shock effect on complacent managers and lead to dramatic performance improvements.
The Benchmarking Process
Stage 1 - Ensure senior management commitment to the benchmarking process.
Stage 2 - The areas to be benchmarked should be determined and objectives should be set.
Stage 3 - Key performance measures must be established.
Stage 4 - Select organizations to benchmark against.
Stage 5 - Measure own and others’ performance.
Stage 6 – Compare performance.
Stage 7 – Design and implement improvement programmes
Stage 8 – Monitor improvements
Advantages of Benchmarking
(a) Position audit – benchmarking can assess a firm’s existing position, and provide a basis for establishing standards of performance.
(b) The comparisons are carried out by the managers who have to live with any changes implemented as a result of the exercise.
(c) Benchmarking focuses on improvement in key areas and set targets which are challenging but evidently achievable.
(d) The sharing of information can be a spur to innovation.
(e) The result should be improved performance, particularly in cost control and delivering value.
Drawbacks of Benchmarking
(a) It can cloud perception of strategic purpose by attracting too much attention to the detail of what is measured, since it concentrates on doing things right rather than doing the right thing: the difference between efficiency and effectiveness.
(b) Benchmarking does not identify the reasons why performance at a particular level, whether good or bad.
(c) It is a catching-up exercise rather than the development of anything distinctive. After the benchmarking exercise, the competitor might improve performance in a different way.
(d) It depends on accurate information about comparator companies.
(e) It is not cost-free and can divert management attention.
(f) It can become a hindrance and even a threat, sharing information with other companies can be a burden and a security risk.
(source: BPP Learning Media)
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Monday, November 23, 2009
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